Thomas B. Drummond - Page 12

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          ability to raise the necessary funds.  Because of the purchaser's           
          inability to do so, the sale was not consummated.  Although                 
          during the fall of 1995 petitioner saddled Bunny and allowed it             
          to be ridden, he did not intend to provide other training for it            
          until it was three years old.                                               
               In December 1994, petitioner purchased another broodmare               
          that had a filly in the spring of 1995.                                     
               In the spring of 1995, petitioner and Ms. Lyman jointly                
          (1) purchased a three-year old untrained gelding named Ziggy                
          (Ziggy) for $10,000, a price that was substantially below its               
          fair market value; (2) sold it about a month later for $30,000;             
          and (3) split a substantial profit after accounting for their               
          minimal expenses (e.g., boarding, training, and veterinarian                
          fees) of between $500 and $1,000.                                           
               Prior to 1993 or 1994, petitioner boarded his horses at                
          facilities owned by others and incurred total average expenses              
          for each such horse of about $500 a month.  Around 1993 or 1994,            
          petitioner began boarding the horses that he then owned in the              
          barn and paddocks located on real property (NLC land) that he had           
          acquired near Middleburg, Virginia, and that the New Life Center            
          was using as a residential facility for patients.                           
               At some unspecified time during the period 1992 through                
          1995, petitioner asked Ms. Lyman to give him riding lessons and             
          to advise him on how to market his young horses.  Starting in the           
          spring of 1994, petitioner asked Ms. Lyman from time to time to             

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